French oil giant TotalEnergies announced on Tuesday the complete takeover of renewables producer Total Eren, taking its share in the company from just under 30% to 100%.
The deal follows an agreement signed between the two companies in 2017, which granted TotalEnergies the right to acquire all of Total Eren (formerly EREN RE) after a five-year period. According to a statement from TotalEnergies, teams at Total Eren will be fully integrated into the company’s renewables business unit.
As part of the transaction, Total Eren was valued at an enterprise value of $4.2bn (€3.8bn) based on an EBITDA multiple negotiated in the initial agreement signed in 2017. The acquisition of 70.8% of the company represents a net investment of around $1.7bn from TotalEnergies.
“With the acquisition and integration of Total Eren, we are now opening a new chapter of our development as the expertise of its team and its complementary geographical footprint will strengthen our renewable activities,” said Patrick Pouyanné, chairman & CEO of TotalEnergies.
“Today, we are welcoming Total Eren’s experienced teams, who will continue their remarkable work with the added resources of a bigger company,” he added.
The integration of Total Eren should cause an increase in TotalEnergies’ integrated power net operating income of around $176.7m and cash flow from operations of around $441.8m next year.
Currently, Total Eren has 3.5GW of renewable capacity in operation worldwide and a solar, wind, hydroelectric and storage projects pipeline of more than 10GW in 30 countries; 1.2GW of these are under construction or in late-stage development.
The company has also recently launched a green hydrogen project in various regions including North Africa, South America and Australia. Green hydrogen projects will be continued post-acquisition through a new partnership in an entity named TEH2, which will be 80% owned by TotalEnergies and 20% owned by EREN Group.
TotalEnergies also announced on Tuesday a deal to buy a 50% stake in Rönesans Enerji, a renewables subsidiary of Turkish contracting and development company Rönesans Holding.
Recent investment into renewables companies follows rebellions by activist shareholder groups at TotalEnergies’ annual general meeting held earlier this year. A resolution calling for the company to do more to cut emissions was put forward by environmental investor group Follow This. TotalEnergies added the resolution to its AGM agenda but recommended that shareholders reject it in a vote.
Despite an uptick in clean energy investment, TotalEnergies remains one of the worst offenders for approving oil and gas expansions, according to research group Oil Change International. In a report published in May, the company ranked third in the world, and first out of international oil majors, for approving fossil fuel expansions. It also found that last year, for every dollar spent on “low-carbon energies”, which includes natural gas, the company spent a total of $8 on investment in oil and gas and on shareholder dividends.
